Since education makes a person more likely to leave your region, how do you justify your investment in human capital?

Monday, March 15, 2010

Brain Drain Report: United States

Richard Florida is returning to fanning the flames of brain drain hysteria. He tries the exact same tactic that spawned his Creative Class empire. Behold the evidence:

From the beginning, I've been worried about this talent shift. Two things are happening. Countries such as Canada, Australia, and New Zealand are going after our best and brightest. In China and India, the best and the brightest are staying. One of the biggest tools foreign companies have is our business schools. All these great companies are coming to recruit. This shift is happening in real time right in front of our eyes. I see it in the Rotman School where I teach. ...

... I did the commencement address this year. I was blown away. In enormous numbers, the students were going to China, to India, to the Middle East. To a person, they said they found much more opportunity and possibility for career advancement over there. My jaw dropped. I literally could not believe how many kids.

As I walked across the campus of Pittsburgh's Carnegie Mellon University one delightful spring day, I came upon a table filled with young people chatting and enjoying the spectacular weather. Several had identical blue T-shirts with "Trilogy@CMU" written across them---Trilogy being an Austin, Texas-based software company with a reputation for recruiting our top students. I walked over to the table. "Are you guys here to recruit?" I asked. "No, absolutely not," they replied adamantly. "We're not recruiters. We're just hangin' out, playing a little Frisbee with our friends." How interesting, I thought. They've come to campus on a workday, all the way from Austin, just to hang out with some new friends.

I noticed one member of the group sitting slouched over on the grass, dressed in a tank top. This young man had spiked multi-colored hair, full-body tattoos, and multiple piercings in his ears. An obvious slacker, I thought, probably in a band. "So what is your story?" I asked. "Hey man, I just signed on with these guys." In fact, as I would later learn, he was a gifted student who had inked the highest-paying deal of any graduating student in the history of his department, right at that table on the grass, with the recruiters who do not "recruit."

What a change from my own college days, just a little more than 20 years ago, when students would put on their dressiest clothes and carefully hide any counterculture tendencies to prove that they could fit in with the company. Today, apparently, it's the company trying to fit in with the students. In fact, Trilogy had wined and dined him over margarita parties in Pittsburgh and flown him to Austin for private parties in hip nightspots and aboard company boats. When I called the people who had recruited him to ask why, they answered, "That's easy. We wanted him because he's a rock star."

There was Pittsburgh's brain drain happening right in front of Florida's eyes.

Florida is oblivious to the current geographic mobility trend because it doesn't fit his narrative. The world is retreating into a nationalist shell. Canadian demographers understand that the country desperately needs foreign-born talent. However, the natives have other ideas. Furthermore, many of provinces are more concerned about brain drain to the United States than poaching H-1B visa refugees.

At stake is the out-migration of educated and ambitious people from India and China. There's already been a serious backlash against such migrants in Australia. The main threat is the return home of entrepreneurs (or would be entrepreneurs).

In its examination of the brain drain to the U.S., the European Commission (2003) reports that 73% of the 15,000 Europeans who studied for their PhD in the States between 1991 and 2000 plan to remain in America. If Europeans are concerned about the migration of their academics to the States, then Israelis should be nothing less than alarmed.

As he did in Pittsburgh, Florida overstates the case. More bluntly, he is and was wrong about the out-migration threat. As for in-migration, I'd bet that even the brightest Indians and Chinese will still come. But how long will they stay? That's the crux of the current debate about how immigration reform could promote economic growth.